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The state Supreme Court has been asked to decide whether a for-profit corporation that runs
charter schools in Ohio owns the desks, computers, books and other items it bought with state tax
money.

The boards of 10 charter schools appealed to the high court on Monday, saying a Franklin County
appellate court ruling that says the company owns the equipment “threatens the public
accountability that ordinarily accompanies the use of public funds.”

The group of schools sued its common operator, White Hat Management, trying to recover property
that the company bought with the schools’ tax money. The appellate court ruled in November that,
because of the contract that the boards signed with White Hat, the firm owns practically all the
schools’ property.

The schools argued that it would be unfair for White Hat to own the property — forcing the
schools to buy it back after their boards parted ways with the management company — because White
Hat already was earning substantial income from the contract. The appeals court disagreed.

There is no support “for the proposition that White Hat is somehow precluded from earning ‘even
more’ by keeping any property it purchased even though it was also earning income from the
continuing fee,” the appellate judges wrote. “There is no case law we are aware of that caps a
private entity’s level of income based upon the sole nebulous reason of it being ‘unfair.’ ”

They said that if it isn’t unfair for White Hat to retain any unspent tax money as profit, then
it’s not unfair for it to keep any property it purchased with that same money.

While traditional boards of education must follow strict state rules whenever they transfer
ownership of any public property to a private entity, the appellate court found that the
legislature had exempted charter schools from those laws (along with most other laws that apply to
district schools).

“We find no reason to read anything more complicated into this plain language,” the court
wrote.

In fact, the charter schools never owned any of the property in the first place, the appellate
judges found, saying that White Hat owned it.

Under the contract the schools signed with White Hat, 96 percent of state tax money and all
governmental grants, such as those for special education and school lunches, passed to White Hat,
which created the nonprofit corporations and hand-picked the initial school boards, according to
attorney James D. Colner, who represents the schools against White Hat.

Attorney Karen S. Hockstad, who also represents the schools, said the appeals court ruling means
that once educational tax dollars pass to a private management company, “it’s no longer public, and
(the firm) can do whatever it wants with the money, or nothing at all.”

Tom Needles, White Hat’s lobbyist, forwarded a written statement from company CEO Tom Barrett: “
We are pleased that the (appellate) court agrees with our position. It gives us considerable
hope as we continue to move through what has been a lengthy and protracted legal process.
From the outset, we were confident in our legal position. (The appellate) ruling allows us to
recommit ourselves to our most important mission, which is serving Ohio’s children and
families."

No one outside of White Hat, including the charter schools’ boards, knows how White Hat spends
money or how much it keeps for itself. A Franklin County judge ruled in 2011 that White Hat must
turn over financial information to its school boards, making it public information.

White Hat appealed all the way to the Ohio Supreme Court, which chose not to hear that case last
summer. But no financial information has been provided, Colner said, and the new Supreme Court case
may further delay its release.